Stelux result turns red
Multi-brand Hong Kong-based Asian retailer Stelux has reported a 13.7 per cent decrease in sales for the last financial year, and a 1.6 percentage point decline in gross profit margin to 59.7 per cent.
Sales fell from HK$3.941 billion last year to $3.402 billion, pushing the Stelux result from a HK$91.8 million net profit last year to a $190 million loss this year.
Stelux operates about 640 stores in Hong Kong, Macau, Mainland China, Malaysia, Thailand and Singapore under watch retail network City Chain, and eyewear retailers Optical 88 and eGG Optical Boutique. It is also a wholesaler of Japanese watch brand Seiko.
About a quarter of the decline in sales was the result of currency fluctuations, with the exchange rate-neutral decline 10.7 per cent.
The leading factor in the gross margin decline was promotional activity which saw inventory fall by 17.3 per cent year-on-year, or by $229.1 million.
During the year, Stelux said the slowdown in emerging economies, volatile stock markets, a strong US dollar and a weak yuan contributed to weak consumer sentiment, falling tourist numbers and sluggish domestic consumption in markets where the group operates.
Most of the decline occurred in the volatile watch sector, with Stelux reporting the “more resilient nature of the optical business” helping Optical 88 and eGG maintain gross profit margins at stable levels.
Stelux says it expects its operating costs to reduce in the new financial year as shop rentals soften, especially in Hong Kong.